A Level Accounting (9706)•9706/12/O/N/18
Explanation
Credit control measured by trade receivables collection period Steps:
- Identify trade receivables days as the average time to collect payments from customers.
- Lower receivables days indicate faster collections and stronger credit control over customers.
- Compare values: X at 50 days vs. Y at 70 days.
- Conclude X collects faster, showing better credit control.
Why A is correct:
- Trade receivables days formula (receivables/credit sales × 365) measures collection efficiency; lower value means better management of customer credit, per standard accounting principles.
Why the others are wrong:
- B: No profit data provided to assess profit control.
- C: Y's higher 70 days shows slower collections, indicating poorer credit control.
- D: No profitability metrics like margins or ROE given.
Final answer: A
Topic: Analysis and communication of accounting information
Practice more A Level Accounting (9706) questions on mMCQ.me